Powering the world’s economy with wind, water and solar, and perhaps a little wood sounds like a good idea until a person looks at the details. The economy can use small amounts of wind, water and solar, but adding these types of energy in large quantities is not necessarily beneficial to the system.

While a change to renewables may, in theory, help save world ecosystems, it will also tend to make the electric grid increasingly unstable. To prevent grid failure, electrical systems will need to pay substantial subsidies to fossil fuel and nuclear electricity providers that can offer backup generation when intermittent generation is not available. Modelers have tended to overlook these difficulties. As a result, the models they provide offer an unrealistically favorable view of the benefit (energy payback) of wind and solar.

If the approach of mandating wind, water, and solar were carried far enough, it might have the unfortunate effect of saving the world’s ecosystem by wiping out most of the people living within the ecosystem. It is almost certain that this was not the intended impact when legislators initially passed the mandates.

[1] History suggests that in the past, wind and water never provided a very large percentage of total energy supply.

Figure 1 shows that before and during the Industrial Revolution, wind and water energy provided 1% to 3% of total energy consumption.

For an energy source to work well, it needs to be able to produce an adequate “return” for the effort that is put into gathering it and putting it to use. Wind and water seemed to produce an adequate return for a few specialized tasks that could be done intermittently and that didn’t require heat energy.

When I visited Holland a few years ago, I saw windmills from the 17th and 18th centuries. These windmills pumped water out of low areas in Holland, when needed. A family would live inside each windmill. The family would regulate the level of pumping desired by adding or removing cloths over the blades of the windmill. To earn much of their income, they would also till a nearby plot of land.

This overall arrangement seems to have provided adequate income for the family. We might conclude, from the inability of wind and water energy to spread farther than 1% -3% of total energy consumption, that the energy return from the windmills was not very high. It was adequate for the arrangement I described, but it didn’t provide enough extra energy to encourage greatly expanded use of the devices.

[2] At the time of the Industrial Revolution, coal worked vastly better for most tasks of the economy than did wind or water.

Economic historian Tony Wrigley, in his book Energy and the English Industrial Revolution, discusses the differences between an organic economy (one whose energy sources are human labor, energy from draft animals such as oxen and horses, and wind and water energy) and an energy-rich economy (one that also has the benefit of coal and perhaps other energy sources). Wrigley notes the following benefits of a coal-based energy-rich economy during the period shown in Figure 1:

Deforestation could be reduced. Before coal was added, there was huge demand for wood for heating homes and businesses, cooking food, and for making charcoal, with which metals could be smelted. When coal became available, it was inexpensive enough that it reduced the use of wood, benefiting the environment.

The quantity of metals and tools was greatly increased using coal. As long as the source of heat for making metals was charcoal from trees, the total quantity of metals that could be produced was capped at a very low level.

Roads to mines were greatly improved, to accommodate coal movement. These better roads benefitted the rest of the economy as well.

Farming became a much more productive endeavor. The crop yield from cereal crops, net of the amount fed to draft animals, nearly tripled between 1600 and 1800.

The Malthusian limit on population could be avoided. England’s population grew from 4.2 million to 16.7 million between 1600 and 1850. Without the addition of coal to make the economy energy-rich, the population would have been capped by the low food output from the organic economy.

[3] Today’s wind, water, and solar are not part of what Wrigley called the organic economy. Instead, they are utterly dependent on the fossil fuel system.

The name renewables reflects the fact that wind turbines, solar panels, and hydroelectric dams do not burn fossil fuels in their capture of energy from the environment.

Modern hydroelectric dams are constructed with concrete and steel. They are built and repaired using fossil fuels. Wind turbines and solar panels use somewhat different materials, but these too are available only thanks to the use of fossil fuels. If we have difficulty with the fossil fuel system, we will not be able to maintain and repair any of these devices or the electricity transmission system used for distributing the energy that they capture.

[4] With the 7.7 billion people in the world today, adequate energy supplies are an absolute requirement if we do not want population to fall to a very low level.

There is a myth that the world can get along without fossil fuels. Wrigley writes that in a purely organic economy, the vast majority of roads were deeply rutted dirt roads that could not be traversed by wheeled vehicles. This made overland transport very difficult. Canals were used to provide water transport at that time, but we have virtually no canals available today that would serve the same purpose.

It is true that buildings for homes and businesses can be built with wood, but such buildings tend to burn down frequently. Buildings of stone or brick can also be used. But with only the use of human and animal labor, and having few roads that would accommodate wheeled carts, brick or stone homes tend to be very labor-intensive. So, except for the very wealthy, most homes will be made of wood or of other locally available materials such as sod.

Wrigley’s analysis shows that before coal was added to the economy, human labor productivity was very low. If, today, we were to try to operate the world economy using only human labor, draft animals, and wind and water energy, we likely could not grow food for very many people. World population in 1650 was only about 550 million, or about 7% of today’s population. It would not be possible to provide for the basic needs of today’s population with an organic economy as described by Wrigley.

(Note that organic here has a different meaning than in “organic agriculture.” Today’s organic agriculture is also powered by fossil fuel energy. Organic agriculture brings soil amendments by truck, irrigates land and makes “organic sprays” for fruit, all using fossil fuels.)

[5] Wind, water and solar only provided about 11% of the world’s total energy consumption for the year 2018. Trying to ramp up the 11% production to come anywhere close to 100% of total energy consumption seems like an impossible task.

Figure 2. World Energy Consumption by Fuel, based on data of 2019 BP Statistical Review of World Energy.

Let’s look at what it would take to ramp up the current renewables percentage from 11% to 100%. The average growth rate over the past five years of the combined group that might be considered renewable (Hydro + Biomass etc + Wind&Solar) has been 5.8%. Maintaining such a high growth rate in the future is likely to be difficult because new locations for hydroelectric dams are hard to find and because biomass supply is limited. Let’s suppose that despite these difficulties, this 5.8% growth rate can be maintained going forward.

To increase the quantity from 2018’s low level of renewable supply to the 2018 total energy supply at a 5.8% growth rate would take 39 years. If population grows between 2018 and 2057, even more energy supply would likely be required. Based on this analysis, increasing the use of renewables from a 11% base to close to a 100% level does not look like an approach that has any reasonable chance of fixing our energy problems in a timeframe shorter than “generations.”

The situation is not quite as bad if we look at the task of producing an amount of electricity equal to the world’s current total electricity generation with renewables (Hydro + Biomass etc + Wind&Solar); renewables in this case provided 26% of the world’s electricity supply in 2018.

Figure 3. World electricity production by type, based on data from 2019 BP Statistical Review of World Energy.

The catch with replacing electricity (Figure 3) but not energy supplies is the fact that electricity is only a portion of the world’s energy supply. Different calculations give different percentages, with electricity varying between 19% and 43% of total energy consumption.1 Either way, substituting wind, water and solar in electricity production alone does not seem to be sufficient to make the desired reduction in carbon emissions.

[6] A major drawback of wind and solar energy is its variability from hour-to-hour, day-to-day, and season-to-season. Water energy has season-to-season variability as well, with spring or wet seasons providing the most electricity.

Back when modelers first looked at the variability of electricity produced by wind, solar and water, they hoped that as an increasing quantity of these electricity sources were added, the variability would tend to offset. This happens a little, but not nearly as much as one would like. Instead, the variability becomes an increasing problem as more is added to the electric grid.

When an area first adds a small percentage of wind and/or solar electricity to the electric grid (perhaps 10%), the electrical system’s usual operating reserves are able to handle the variability. These were put in place to handle small fluctuations in supply or demand, such as a major coal plant needing to be taken off line for repairs, or a major industrial client reducing its demand.

But once the quantity of wind and/or solar increases materially, different strategies are needed. At times, production of wind and/or solar may need to be curtailed, to prevent overburdening the electric grid. Batteries are likely to be needed to help ease the abrupt transition that occurs when the sun goes down at the end of the day while electricity demand is still high. These same batteries can also help ease abrupt transitions in wind supply during wind storms.

Apart from brief intermittencies, there is an even more serious problem with seasonal fluctuations in supply that do not match up with seasonal fluctuations in demand. For example, in winter, electricity from solar panels is likely to be low. This may not be a problem in a warm country, but if a country is cold and using electricity for heat, it could be a major issue.

The only real way of handling seasonal intermittencies is by having fossil fuel or nuclear plants available for backup. (Battery backup does not seem to be feasible for such huge quantities for such long periods.) These back-up plants cannot sit idle all year to provide these services. They need trained staff who are willing and able to work all year. Unfortunately, the pricing system does not provide enough funds to adequately compensate these backup systems for those times when their services are not specifically required by the grid. Somehow, they need to be paid for the service of standing by, to offset the inevitable seasonal variability of wind, solar and water.

[7] The pricing system for electricity tends to produce rates that are too low for those electricity providers offering backup services to the electric grid.

As a little background, the economy is a self-organizing system that operates through the laws of physics. Under normal conditions (without mandates or subsidies) it sends signals through prices and profitability regarding which types of energy supply will “work” in the economy and which kinds will simply produce too much distortion or create problems for the system.

If legislators mandate that intermittent wind and solar will be allowed to “go first,” this mandate is by itself a substantial subsidy. Allowing wind and solar to go first tends to send prices too low for other producers because it tends to reduce prices below what those producers with high fixed costs require.2

If energy officials decide to add wind and solar to the electric grid when the grid does not really need these supplies, this action will also tend to push other suppliers off the grid through low rates. Nuclear power plants, which have already been built and are adding zero CO2 to the atmosphere, are particularly at risk because of the low rates. The Ohio legislature recently passed a $1.1 billion bailout for two nuclear power plants because of this issue.

If a mandate produces a market distortion, it is quite possible (in fact, likely) that the distortion will get worse and worse, as more wind and solar is added to the grid. With more mandated (inefficient) electricity, customers will find themselves needing to subsidize essentially all electricity providers if they want to continue to have electricity.

The physics-based economic system without mandates and subsidies provides incentives to efficient electricity providers and disincentives to inefficient electricity suppliers. But once legislators start tinkering with the system, they are likely to find a system dominated by very inefficient production. As the costs of handling intermittency explode and the pricing system gets increasingly distorted, customers are likely to become more and more unhappy.

[8] Modelers of how the system might work did not understand how a system with significant wind and solar would work. Instead, they modeled the most benign initial situation, in which the operating reserves would handle variability, and curtailment of supply would not be an issue.

Various modelers attempted to figure out whether the return from wind and solar would be adequate, to justify all of the costs of supporting it. Their models were very simple: Energy Out compared to Energy In, over the lifetime of a device. Or, they would calculate Energy Payback Periods. But the situation they modeled did not correspond well to the real world. They tended to model a situation that was close to the best possible situation, one in which variability, batteries and backup electricity providers were not considerations. Thus, these models tended to give a far too optimistic estimates of the expected benefit of intermittent wind and solar devices.

Furthermore, another type of model, the Levelized Cost of Electricity model, also provides distorted results because it does not consider the subsidies needed for backup providers if the system is to work. The modelers likely also leave out the need for backup batteries.

In the engineering world, I am told that computer models of expected costs and income are not considered to be nearly enough. Real-world tests of proposed new designs are first tested on a small scale and then at progressively larger scales, to see whether they will work in practice. The idea of pushing “renewables” sounded so good that no one thought about the idea of testing the plan before it was put into practice.

Unfortunately, the real-world tests that Germany and other countries have tried have shown that intermittent renewables are a very expensive way to produce electricity when all costs are considered. Neighboring countries become unhappy when excess electricity is simply dumped on the grid. Total CO2 emissions don’t necessarily go down either.

[9] Long distance transmission lines are part of the problem, not part of the solution.

Early models suggested that long-distance transmission lines might be used to smooth out variability, but this has not worked well in practice. This happens partly because wind conditions tend to be similar over wide areas, and partly because a broad East-West mixture is needed to even-out the rapid ramp-down problem in the evening, when families are still cooking dinner and the sun goes down.

Also, long distance transmission lines tend to take many years to permit and install, partly because many landowners do not want them crossing their property. In some cases, the lines need to be buried underground. Reports indicate that an underground 230 kV line costs 10 to 15 times what a comparable overhead line costs. The life expectancy of underground cables seems to be shorter, as well.

Once long-distance transmission lines are in place, maintenance is very fossil fuel dependent. If storms are in the area, repairs are often needed. If roads are not available in the area, helicopters may need to be used to help make the repairs.

An issue that most people are not aware of is the fact that above ground long-distance transmission lines often cause fires, especially when they pass through hot, dry areas. The Northern California utility PG&E filed for bankruptcy because of fires caused by its transmission lines. Furthermore, at least one of Venezuela’s major outages seems to have been related to sparks from transmission lines from its largest hydroelectric plant causing fires. These fire costs should also be part of any analysis of whether a transition to renewables makes sense, in terms of either cost or energy returns.

[10] If wind turbines and solar panels are truly providing a major net benefit to the economy, they should not need subsidies, even the subsidy of going first.

To make wind and solar electricity producers able to compete with other electricity providers without the subsidy of going first, these providers need a substantial amount of battery backup. For example, wind turbines and solar panels might be required to provide enough backup batteries (perhaps 8 to 12 hours’ worth) so that they can compete with other grid members, without the subsidy of going first. If it really makes sense to use such intermittent energy, these providers should be able to still make a profit even with battery usage. They should also be able to pay taxes on the income they receive, to pay for the government services that they are receiving and hopefully pay some extra taxes to help out the rest of the system.

In Item [2] above, I mentioned that when coal mines were added in England, roads to the mines were substantially improved, befitting the economy as a whole. A true source of energy (one whose investment cost is not too high relative to its output) is supposed to be generating “surplus energy” that assists the economy as a whole. We can observe an impact of this type in the improved roads that benefited England’s economy as a whole. Any so-called energy provider that cannot even pay its own fair share of taxes acts more like a leech, sucking energy and resources from others, than a provider of surplus energy to the rest of the economy.

Recommendations

In my opinion, it is time to eliminate renewable energy mandates. There will be some instances where renewable energy will make sense, but this will be obvious to everyone involved. For example, an island with its electricity generation from oil may want to use some wind or solar generation to try to reduce its total costs. This cost saving occurs because of the high price of oil as fuel to make electricity.

Regulators, in locations where substantial wind and/or solar has already been installed, need to be aware of the likely need to provide subsidies to backup providers, in order to keep the electrical system operating. Otherwise, the grid will likely fail from lack of adequate backup electricity supply.

Intermittent electricity, because of its tendency to drive other providers to bankruptcy, will tend to make the grid fail more quickly than it would otherwise. The big danger ahead seems to be bankruptcy of electricity providers and of fossil fuel producers, rather than running out of a fuel such as oil or natural gas. For this reason, I see little reason for the belief by many that electricity will “last longer” than oil. It is a question of which group is most affected by bankruptcies first.

I do not see any real reason to use subsidies to encourage the use of electric cars. The problem we have today with oil prices is that they are too low for oil producers. If we want to keep oil production from collapsing, we need to keep oil demand up. We do this by encouraging the production of cars that are as inexpensive as possible. Generally, this will mean producing cars that operate using petroleum products.

(I recognize that my view is the opposite one from what many Peak Oilers have. But I see the limit ahead as being one of too low prices for producers, rather than too high prices for consumers. The CO2 issue tends to disappear as parts of the system collapse.)

Notes:

[1] BP bases its count on the equivalent fossil fuel energy needed to create the electricity; IEA counts the heat energy of the resulting electrical output. Using BP’s way of counting electricity, electricity worldwide amounts to 43% of total energy consumption. Using the International Energy Agency’s approach to counting electricity, electricity worldwide amounts to only about 19% of world energy consumption.

[2] In some locations, “utility pricing” is used. In these cases, pricing is set in a way needed to provide a fair return to all providers. With utility pricing, intermittent renewables would not be expected to cause low prices for backup producers.

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About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

1,461 Responses to Rethinking Renewable Mandates

Hi Gail, great article as always. As a Dutchman I do have a bone to pick with your characterisation of Dutch historic windmill usage.
Windmills were definitely not just used to keep polders (reclaimed land either from water or fens) dry. In fact, the incredibly widespread use of windmills lead to what has often been characterised as a proto-industrial revolution. Windmills were used in an enormous variety of ways: from traditional milling of seeds (wheat, mustard, linseed etc.) to using complex mechanical engineering that turned the circular motion into a vertical or horizontal motion. This way, wood could be processed into planks faster than in other countries, which led to the Dutch outproducing other countries in maritime construction, among other things. Near where I grew up, there was a paper mill that used its wind power to grind wood into dust, and mix dust with water into pulp for paper production.
Windmills were one of the things that led to the Dutch Golden Age, when the Dutch economy was by far the most prosperous in the world. Average household income in the Province of Holland was around $6000, converted to 1990 dollars. Literacy in cities was around 85%. Two-thirds of urban households owned a work of art, such as an ornamental vase or a painting. The urbanization rate in Holland was over 55%.
Other ingredients were cheap thermal energy through peat, a near-monopoly on the Baltic grain trade and a dominant position in the trade of Far Eastern spices and other goods (though I suspect the latter was a result of the other factors).

If you want to get an idea of how extremely widespread the use of windmills was in the Netherlands, visit this map:http://www.allemolenskaart.nl/
It maps all historical windmills, of which there were many thousands. Many of these were used well into the late 19th century, and some even into the 20th. I don’t mean to say that you can run a modern industrialized society on wind power, just that traditional windmills, used in clever ways, can help support a fairly complex economy from a pre-fossil perspective. Thanks for the posts and I hope you appreciate this extra tidbit of information.

Very interesting, Michiel. Have you read the wonderful book by Michael Pye, The Edge of the World ? Shows how the inventiveness and brilliance of people living in NW Europe – especially the Netherlands – developed modern civilisation.

NW Europe wasn’t very hospitable post ice age, and the people of the Netherlands in particular were forced into survival mode by the conditions in which they found themselves—much like the Venetians later—survive or die.

it was a harsh place to live but they got very good at it, and very tough

that mindset is reflected right through to our own time, northern Europeans dominate economically, while southern europeans are not so ‘driven’

Norman, just wanted to let you know that Kunstlers latest post sounds a lot like what I had read from posted excerpts from your book ‘End of More’. And I happen to agree with his post and your writings that we are just going to have to get used to it.

thanks
most people writing on this subject tend to say much the same thing—just regurgitated in different word combinations

Almost impossible to say something new

Back in 2011 Noam Chomsky and I both wrote independent pieces (at least he never asked me) that said “A Trump” was inevitable for 2016 or 20–a certain pattern of thinking and outside circumstances tends to throw up the same conclusions i guess
Now everyone jumps on the ‘fascist’ bandwagon.

One point of general disagreement though—I don’t we will ‘get used to it’ at least not for a very long time, until we’ve forgotten what we are used to right now

I concur. I think most people will not get used to it and find various ways to exit early and a much larger number will just disappear due to circumstances they find themselves in. I guess what I was implying and should have made clearer is that there is just not anything that can be done about it.

“that mindset is reflected right through to our own time, northern Europeans dominate economically, while southern europeans are not so ‘driven’”

That’s both a racist statement and true. Its origin is genetic selection in historical times. You may be familiar with the tame Russian foxes. Northern Europeans were subjected to roughly the same level of selection for traits related to economic success over the same number of generations. There is no doubt the psychological traits of the foxes was changed, why should humans be any different?

Google Gregory Clark Genetically capitalist for the paper.

In the current social matrix, “racist” is bad. It is an assumption that the average characteristics of different groups are the same. But groups of humans who have been subjected to different selection pressures, obviously, differ between groups.

“Japanese exports fell for an eighth straight month in July, weighed down by shipments of auto parts and semiconductors, as slowing economic growth and trade battles raise fears of a global recession.”

“[South Korea’s] Household debt rose 4.1 percent in the second quarter from a year earlier, surpassing the growth rate of gross domestic production and household income, which stood at 3 percent and 3.9 percent, respectively, in the same period.

“There is growing concern that the continued rise in household debt could lead to “debt deflation” if it meets with the decline in asset prices, including real estate.”

If Thailand isn’t growing by very much (2.5% according to one economist), how is world economic growth expected to be as high as the IMF is forecasting? The IMF in July 2019 is forecasting a 3.2% growth rate for the world economy as a whole in 2019, with a 4.1% growth rate for emerging g market and developing economies and a 1.9% growth rate for advanced economies.

“Before the 2010s, it was common for one in every five economies to be growing at 7 percent or more annually. Now, among the world’s 200 economies, just eight, or one in 25, are on track to grow 7 percent this year. Most of those are small economies in Africa.”

“The trade wars and a breakdown in international economic diplomacy cause businesses around the world to pull back. This leads to further tumbles in markets and job losses, prompting American consumers to become more cautious. High corporate debt loads create a wave of bankruptcies. And central bank policy proves impotent, combined with fiscal policy that is nonexistent.”

Right leaning blogs are all saying that it is a left wing conspiracy that the economy is going into recession. They believe that the left is trying to make trump look bad with fake news about the economy. Even taking all that out the fundamentals say otherwise; it does not matter who is in control there is just too much debt in the system for it not to be bogged down. Crazy how any news that you don’t want to hear becomes a conspiracy or fake news…..the left wants to hear that the economy can just switch to alternative energy…..

Yes another attack on their currency, country which is balancing budgets and not over printing on regular expenses – comparatively speaking to others, interesting isn’t it.

There are no “massive” protests in Moscow as of lately, people have been burned by the color revolution chimera enough (+ 1990s chaos memories are still strong)) and are somewhat immunized. Obviously, the mood is not exactly joyful, understandably it’s very tiresome to be several third/fourth turnings on the receiving end of incoming invasions again and again (both militarily and via global debt regimes of the West)..

Could it snap at some point into regime change proper, anything is possible, but very low probability..

30 miles north of Pittsburgh, Pennsylvania, in a township adjacent to a state forest, oil and gas giant Royal Dutch Shell is building a sprawling new plant to support what it sees as the future of its business: making millions of tons of new, virgin plastic

Virgin plastic pellets are the biggest pollution disaster you’ve never heard of

President Trump visited the facility last week, highlighting the 5,000 construction jobs it has created. The plant is just one of more than 300 new plastic facilities proposed or permitted for the US in the near future. Shell, along with other major oil and gas companies like Exxon, sees plastic as one avenue for growth as natural gas prices plummet—and, longer-term, as a way to weather the world’s slow rejection of fossil fuels as an energy source.
rely on a process known as “ethane cracking,” where ethane gas, once seen as an unusable byproduct of gas extraction, can be molecularly “cracked”—its carbon and hydrogen atoms rearranged—to form ethylene, the main building block of plastic.

will pump out 1.8 million tons (1.6 million metric tons) of plastic each year. In a world where buying virgin plastic is often cheaper than using the recycled stuff, the new product will likely find an eager manufacturing market. The vast majority of that plastic, like the vast majority of all plastic made up to now, will likely not be recycled. And it will exist virtually forever, crumbling into microplastics that show up most everywhere scientists look for them.
little research exists to quantify how many of these pre-production pellets end up in the environment. Available estimates tend to be locally isolated; one recent study found that production facilities in the UK lose between 5 billion and 35 billion pellets a year, for example. In 2017, two shipping vessels collided, spilling 49 metric tons of pellets into the sea and coating 2,000 kilometers (1,243 miles) of South Africa’s coastline with nurdle.

The first two paragraphs sort of tell the right story, but I think that they are confusing:

For now, if Shell can’t make money selling its plentiful natural gas, it can certainly make plastic with it. As a whole, the oil and gas industry aims to increase plastic feedstock production by at least 33% by 2025.

The Shell plant will rely on a process known as “ethane cracking,” where ethane gas, once seen as an unusable byproduct of gas extraction, can be molecularly “cracked”—its carbon and hydrogen atoms rearranged—to form ethylene, the main building block of plastic.

Yes, indeed, ethane can be burned as a not very valuable fuel, dumped in with natural gas. If natural gas prices were sky high as a fuel, there would be no question of making it into plastics. The issue is trying to make something that the market values more highly than natural gas.

A related issue:
By the way, pipelines are the big cost with natural gas. (Also the wells themselves, and the fracking.) People assume that natural gas peaking plants are cheap, but they aren’t when all of the backup costs are included. The people looking at the cost of using peaking plants to provide backup power for wind and solar generally look only at the cost of the little plant that burns the natural gas. In fact, these are cheap. If all the costs surrounding having the peaking plants are included, including the little-used pipelines, it is not cheap.

Shipments of recreational vehicles to dealers have fallen about 20% so far this year, after a 4.1% drop last year, according to data from the RV Industry Association. Multiyear drops in shipments have preceded the last three recessions.

“The RV industry is better at calling recessions than economists are,” said Michael Hicks, an economist at Ball State University, in Muncie, Ind. Mr. Hicks says softening consumer demand for RVs coupled with rising vehicle prices due to tariffs suggests the economy is either in a recession or soon headed for one.

He sure did as that link shows. That is coincidental and kind of weird timing. I saw him in a movie where he stars and it was kind of a switcheroo from Blade Runner, as he plays a cop chasing down some killer with a gun that doesn’t look too much different than the one Harrison Ford used in Blade Runner. I thought, wow now he’s (Rutger) is doing the chasing. But also the movie is set in a futuristic London that has flooded and has that dark dystopian type feel of Blade Runner. He’s out for revenge because the killer he’s after took out his partner. What he does a good job of is being on edge all the time, but in a comedic way. It works and I highly recommend the 1992 movie, ‘Split Second’. The movie works if you can laugh along with it.

When are you going to come down, Sir Elton?
When are you going to land?

Sir Elton John leaps to Harry and Meghan’s defence, revealing he supplied couple with private jet for Nice getaway

Sir Elton John by his own admission counted Princess Diana as “one of my dearest friends” and famously and movingly sang at her funeral.

On Monday, the rock star leapt to the defence of her youngest son, in an attempt to shield the Duke of Sussex and his wife from “relentless and untrue assassinations” amid allegations of hypocrisy over private jet flights taken by the couple.

In putting a metaphorical arm around the Duke and Duchess, Sir Elton disclosed that he had paid for Prince Harry and his wife to fly on a private jet to his home in the south of France. He said Prince Harry, his wife and their son Archie needed the “safety and tranquillity” offered by his palatial villa on the French Riviera.

Sir Elton insisted he and his husband David Furnish had made “an appropriate contribution” to a company that specialises in offsetting carbon emissions. The flights, said Sir Elton, were as a consequence carbon neutral.

It was, according to reports, their fourth private jet flight in 11 days – they had previously flown to and from Ibiza to celebrate the duchess’s 38th birthday – prompting cries of hypocrisy. The couple have campaigned on green issues and earlier this month the prince said he and his wife would have “two children, maximum” as part of their contribution to saving the environment.

Oh my, just came across this by accident…
10 things you need to know about the massive new oilsands mine that just got a green light
Surprise, surprise
Environmental concerns flagged by the panel include the removal of old-growth forests, the destruction or permanent alteration of fish habitat, the release of a large amount of carbon pollution and the loss of wetlands and areas of “high species diversity potential.”

Alberta’s oilsands North of Fort McMurray.
EXPLAINER
10 things you need to know about the massive new oilsands mine that just got a green light
A review panel found the Frontier Mine would have ‘irreversible’ impacts on the environment and ‘significant’ adverse effects on Indigenous peoples, but recommended it be approved in the ‘public interest’ anyway
Sharon J. Riley Jul 26, 2019 9 min read

On Thursday, a joint review panel — representing the federal and Alberta governments — released its recommendations on whether a massive new open-pit mine in the oilsands should proceed.

It recommended Teck’s Frontier Mine get the green light, despite finding it will have significant and permanent impacts on the environment.

The decision now moves to Minister of Environment and Climate Change, Catherine Mckenna, who has until February to issue a decision.

Environmental concerns flagged by the panel include the removal of old-growth forests, the destruction or permanent alteration of fish habitat, the release of a large amount of carbon pollution and the loss of wetlands and areas of “high species diversity potential.”

But, overall, the panel found these impacts were outweighed by economic benefits, saying “the project is in the public interest.”

Here are 10 things you need to know about this proposed new mine.

[Sorry- Too long a quote – I removed part of it. Gail]
Got to love BAU…they wouldn’t lie, would they?

Pre-warning: this series of posts is called “thinking aloud about…” because I do not know where it ends. I am genuinely exploring things that I do not understand very well – but are central to how the economic world and how markets will turn out over the next year or two and maybe the next decade. I do not know the answers and maybe this blog series will not end or will fizzle out….

Also I will be on the road for six weeks. Expect the posts to be sporadic at best.

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The most interesting thing I have seen in the past three months was an interview on Real Vision by Shannon McConaghy of Horseman Capital entitled “Prepare for a Japanese Banking Meltdown?”.

The title on the interview has a question mark. I am not sure that Shannon would include the question mark.

But the argument is pretty simple really. Japanese regional banks have – for decades – had excess funds. They have found it extremely hard to lend at adequate rates as excess funds is the Japanese condition. Rates the banks can achieve on loans are very low.

The result is that Japanese banks (especially regional banks) have very low returns on equity and generally trade below book.

As an extreme example about fifteen years ago I asked Bank of Kagoshima why they could not achieve their four percent ROE target and they said that it would “put too much strain on the local community.” That bank is gone now – but the problem remains right across Japanese banking.

Shannon McConaghy’s thesis is that “Abenomics” has made the problem much worse. He states that the average interest rate achieved on a loan by a Japanese regional bank in the first half of this year was about 79 basis points. The rate was 62 basis points in May but there may be some seasonality.* He thinks it costs about a percent to run the bank. There are staff and systems to pay and the like. So he thinks that Japanese regional banks will be loss making before they have any credit losses. Then of course they have been rolling credit losses in zombie businesses for decades and so after the credit losses settle there won’t be any equity left to earn any return on anyway.

I’m afraid “Real Vision” is some sort of perma bear libertarian ideology outfit, which makes you in the world of global CB-gov cabal bankrupt in very short order.. Their actionable predictions are useless.. on timing and not specific enough on details.

On the other hand if you followed Harry’s links over here, you would have known what to short specifically at least since Q3 2018 (e.g. Chinese raw material suppliers started to wobble) and make some decent return on it.. apart from other good info and conversations.